2 replies to this topic

[dw85745]

I now see why dachief has and continues to be BULLISH. There is only one person controlling prices and that is the FED. Hence the old Wall Street quote: “Don’t Fight the FED!” A bigger question for me is at what point does our monetary system collapse. The value of money is only accepted when both parties believe it represents something of value. When the US was formed, those individuals who bought into the concept of the US dollar were told that the US currency was backed by Spanish bullion. This bullion in fact Never existed. Today we are swimming in money (paper) thanks to the FED. As I see it, the FED hopes that by holding down interest rates all this money will somehow flow out into the economy. Since the cost to borrow is now cheaper, people will borrow at these historical low interest rates and then use this cheap money to build or purchase something. As more goods and services are demanded business will hire more people, unemployment will drop, and the economy will improve. But what is really happening. Mom and Pop who don’t “play” the markets and who have their money in the bank are loosing purchasing power ever day. Yet even with this cheap money, I don’t see them borrowing and taking any risks to stimulate the economy. I do however see them getting frustrated with lesser and lesser bank returns and transferring those “safe” funds into this auction house we call the markets. The banks, on the other hand, who are the lenders of all this extra money, say why lend and incur higher risk, when all we have to do is put our (depositors) money in the market and generate great returns. So those who are employed , and have money to put in the bank, continue to loose purchasing power. Any shiftng of money, if any, to a 401k or mutual funds, gets immediately put into the markets, and does nothing to help stimulate the economy. So, where does that leave us. I’m not sure. All I can say is I’ve pretty much lost faith in our monetary system. and the only game in town is the FED. My2Cents.

[andiron]

dollar index has stopped declining since 2008 and basing since then...that QE has not been able to lower its value reflects global disease...and FED cannot win it... so either stock market gets ever more unhinged based on pure market psychology and then crash or FED could start losing control of the system if bond market does not rally as much and sells off again after this rally... It is jellen time.

[dw85745]

The more I think about it, our whole system rests on this small group (FED) of supposedly "knowledgeable" people who rely on this in-exact science they were taught and which we call economics. Heaven help us!!